Problem:
Frieda is an accrual-basis taxpayer who owns a furniture store. The furniture stpre had the following sales of inventory:
| Year |
Installment sales |
Profit |
Collections in 2011 |
| 2009 |
$60,000 |
$30,000 |
$20,000 |
| 2010 |
100,000 |
50,000 |
30,000 |
| 2011 |
250,000 |
125,000 |
40,000 |
Required:
Question: For tax purposes, Frieda should report gross profit for 2011 of__?
a. $40,000
b. $65,000
c. $90,000
d. $125,000
Note: Please show how to work it out.